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Gross Profit Margin

This ratio is used mainly for manufacturing businesses or those that purchase and further develop materials for sale. It measures the value added to purchased materials through the manufacturing or development process. It is usually presented as a percentage and represents the extent to which the core operations of the business is generating funds to cover other costs of the business and sufficient net profit.

There is no normal gross profit margin for any business, although a positive gross profit is essential for even minimal success. The higher the better is the rule for gross profit margin.

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The material in this work is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. IFC does not guarantee the accuracy, reliability or completeness of the content included in this work, or for the conclusions or judgments described herein, and accepts no responsibility or liability for any omissions or errors (including, without limitation, typographical errors and technical errors) in the content whatsoever or for reliance thereon.